Correlation Between GTM Holdings and De Licacy

Can any of the company-specific risk be diversified away by investing in both GTM Holdings and De Licacy at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GTM Holdings and De Licacy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GTM Holdings Corp and De Licacy Industrial, you can compare the effects of market volatilities on GTM Holdings and De Licacy and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GTM Holdings with a short position of De Licacy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GTM Holdings and De Licacy.

Diversification Opportunities for GTM Holdings and De Licacy

-0.71

Correlation Coefficient

GTM Holdings  De Licacy

Pay attention - limited upside

The 3 months correlation between GTM and 1464 is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding GTM Holdings Corp and De Licacy Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on De Licacy Industrial and GTM Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GTM Holdings Corp are associated (or correlated) with De Licacy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of De Licacy Industrial has no effect on the direction of GTM Holdings i.e., GTM Holdings and De Licacy go up and down completely randomly.

Pair Corralation between GTM Holdings and De Licacy

Assuming the 90 days trading horizon GTM Holdings Corp is expected to under-perform the De Licacy. But the stock apears to be less risky and, when comparing its historical volatility, GTM Holdings Corp is 2.94 times less risky than De Licacy. The stock trades about -0.09 of its potential returns per unit of risk. The De Licacy Industrial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,330  in De Licacy Industrial on September 3, 2024 and sell it today you would earn a total of  225.00  from holding De Licacy Industrial or generate 16.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GTM Holdings Corp  vs.  De Licacy Industrial

GTM Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GTM Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, GTM Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

De Licacy Industrial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in De Licacy Industrial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, De Licacy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GTM Holdings and De Licacy

The main advantage of trading using opposite GTM Holdings and De Licacy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GTM Holdings position performs unexpectedly, De Licacy can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in De Licacy will offset losses from the drop in De Licacy's long position.

The idea behind GTM Holdings Corp and De Licacy Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.